The following is an excerpt from our December issue. Subscribe now.

by: Chuck Bates

Living in the same community we all have one issue in common that determines our future success or demise as a locality. We all want our community to survive economically. Whether someone is living in the most toney neighborhood or just in “the hood” we all have to make a living and in order to do that we have to attract capital to our community in the forms of new families and new businesses. Let’s face it everybody must feed, house and clothe themselves’ and that requires capital. But what does it take to retain that capital?

Capital looks for two things: 1.) Economic Stability and 2.) Political Stability. One need only look to other regions of the world to see the risk aversion of capital. Why are there no serious skyscraper lined cities in say Republic of Congo? Simply the risk to capital due to both economic and political instability overwhelms the potential reward for investing in the area. It is not due to a lack of natural resources as the nation is mineral rich. The problem lies specifically in the political upheavals and constant warring between factions thus destroying any hope of economic stability. But we don’t have to look to developing areas just look at Lebanon. Lebanon was at one point considered “The Riviera of the Middle East”. It was a business and banking center and today it is in constant turmoil due to political instability to the point new investment in such a place would be almost certain loss to the investor. Yugoslavia is another example of a nation that was on its way to modernization both politically and economically. The Winter Olympics were even held in the country but today it is a shell of a nation nowhere near where it was just two decades ago, all due to political instability and the subsequent flight of capital.
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